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On an unrelated note, does anyone know if YC is investing their $[18]k using their SAFE security or will they continue using Series AA?
by mikikian 13y ago
On an unrelated note, does anyone know if YC is investing their $[18]k using their SAFE security or will they continue using Series AA?
- memossy 13y agoIt would not make sense to structure it as a SAFE security as then it would be a tiny percentage of the company at Series A when it converts, messes up the entire economics.
- thecolorblue 13y agoSo do SAFE securities only ever make sense in a seed round?
- memossy 13y agoThe purpose (as I see it) for SAFE, just like convertible notes, is that early stage startups are hard to value. At Series A you have a value and subsequent raisings can use that as a benchmark for up/down rounds. You also tend to have VCs etc take liquidation preferences and such like, which dilute the benefits of a convertible note. The initial $20k(ish) for 6-7% of the company is where the real value for Y-combinator kicks in, if that was in the form of a SAFE, using a 25% discount to a $5m Series A valuation at $4m would mean that Y-combinator owned just 0.5% for their investment of $20k + value add. I imagine the $80k convertible note should be a SAFE though?
- kirsty 13y agoYC will continue to structure our investment as we have always done - ie we use a Share Purchase Agreement to buy shares. The docs are not the same as the Series AA docs that we publish though. We buy common stock and the Seris AA docs are for investors that buy preference stock. In the most recent batch, the YCVC investment was made using the safe documents.